Oregon income tax collections down this year

Written by Kelly Kaczala

April 22, 2010

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Oregon City Administrator Mike Beazley told council at a recent meeting that income tax collections were down by 16 percent, or $250,000, for the first quarter of this year compared to the first quarter last year.

“I wanted to give a little heads up on revenue as we get through the first quarter of the year. It’s been clear that many of our neighbors are facing revenue challenges. The city to the south of us has had more challenges than we have. Oregon is not immune to that,” said Beazley, referring to Northwood, which has been cutting its budget and personnel in the last two years due to a reduction of income tax collections.

“We are fortunate that we’ve built up a very responsible and healthy reserve in recent years,” he said. “But our revenue to date for the first quarter is coming in at a slower pace than at any time in the last several years. Even the less volatile sections, like payroll withholding, which is kind of the steadiest historically, is coming in at a considerably lower rate. This is just something that we have to be aware of as we look forward.”

The city, he added, has a considerable reserve built up over the years to be used in emergencies or during recessions.

“We have a healthy reserve, and a significant scheduled deposit to our reserve contained within the budget this year that gives us some flexibility,” he said. “We’re just paying some special attention to revenue as we look into the coming months.”

The administration will be carefully monitoring expenditures “as we look forward to make sure we are sustainably operating the city,” Beazley added.

Beazley emphasized to The Press last week that the city’s budget is in good shape.

“I just wanted to make sure to let council know, as we move through the year, what our revenue picture looks like. In general, if you look at the country, the state, and the region, unemployment is still high,” said Beazley.

Government revenues are a reflection of the local economy, he added, and whether or not people are working.

“Unemployment is still tracking a little bit higher across this region than it was a year ago at this time. So you’ll find local withholding taxes will tend to be down a little bit across the area. Obviously, there’s some pockets where it’s a little different than others. But most communities are dealing with a fairly similar challenge. Oregon is relatively healthier, as we have very significant employers that are such an important part of the tax base for the city,” he said, referring to Bay Park Community Hospital, St. Charles Mercy Hospital, and the Sunoco and BP-Huskey refineries.

“The most important number that is fairly consistent is that we’re down approximately $250,000 in the first quarter on our payroll withholding, which is the primary or significant portion of our income tax. That’s just a number we want to be aware of. When dealing with unemployment rates, if you look at area unemployment statistics in March, Ottawa County is at 18 percent, the third largest in the state, and Lucas County is at 12.8 percent. So Oregon is probably somewhere in that range,” he said.

Major projects at the refineries will improve the city’s financial condition this year, he said.

“We’re expecting some good things. Sunoco is making a major investment in its plant right now, and BP Husky has a significant investment beginning late this year. So Oregon is relatively healthy as we move forward,” he said.

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